Invesco Ltd. (IVZ) Earnings Call Transcript & Summary

All right. Well, thanks, everyone, for joining. Pleased to say joined by Andrew Schlossberg, CEO of Invesco.

Thank you for having us. Thank you.

Thanks for making the trip. It's not such a big delta in weather as it is from New York, but...

I know. You had it rough.

Yes, yes. It was touching. I was worried about travel.

Travel. Yes. It was nice in Atlanta.

What's that?

It was nice in Atlanta.

Good.

I'm all endorsement, if anybody is...

Here we go. [indiscernible]. So I love to start with big picture.

Sure.

Right. Public markets are new record highs, abundance of cash, looking for deployment. New administration in Washington, right? A lot of excitement. What are clients saying about the backdrop and as we enter into this year? And have you noticed any shift in like overall risk sentiment? And what does that mean as far as impact to your business and the industry?

Probably in the short word or two, I'd say, cautious optimism. And that started more in the back half of last year and even throughout last year. And certainly with the new administration, bringing some new opportunities. The cautious part is there's still a lot of cash on the sidelines, as you know, disproportionately high amount of cash. I think there's -- still trying to figure out where things are going economically, where things are going from a market standpoint, certainly the geopolitics. So there's still a lot of those conversations with clients. And the participation where people are putting money has still remained pretty narrow. So for us, that's still a lot of ETF flows, some of which we think are long term. Some of them are usually the early path of getting into market. So I think that's a good sign for more optimism. We're starting to see in the fixed income side, people move off the sidelines, put a little more duration in their portfolio. We're seeing municipal bonds pick up as a category. We're seeing corporate investment grade, both in the U.S. and some global with institutions starting to pick up a little bit. On the equity side, it's been a very heavy U.S. and U.S. tech, but we're starting to see more flow and more interest into value and some into small cap. And then on the private side, the demand picture for us is more interest in real estate debt than equity. And that's been a good story, as well as alternative credit. So bank loans, CLOs, those sorts of things are flowing well. So we're optimistic for this year, but I still think it's going to take a little time for things to digest.

Okay. That's fair. And you touched on it there fixed income. It's been really quite good for you guys, which is sort of interesting because it's not -- normally when I think of Invesco, I don't think of bonds. So what strategies or products have been most active there?

Yes. I mean -- I'm actually glad you set it up that way. It's an area that I don't think is well represented in the public domain in terms of what Invesco does in fixed income. So just give me 30 seconds to just reorient people to Invesco's fixed income, which is we manage about $600 billion of fixed income. Of that, about $400 billion is longer term. So $200 billion of it is in liquidity. But of that $400 billion, it's a mix of active and passive. It's delivered in mutual funds, ETFs, SMAs, institutional accounts. It also is public and private. So our alternative credit is about $50 billion of that and the business is global. And our China JV, which hopefully we can talk about later, has a big fixed income orientation. So we're a big fixed income player. We had about -- of our flows last year in all of those long-term assets that I mentioned, it was over $25 billion of fixed income flows. So we've seen the demand for fixed income at Invesco. And as I was mentioning, where we're seeing it from an immediate growth standpoint, SMAs in the retail space for us and ETFs continue to be the vehicle of choice and people are going out longer duration, as I mentioned, a little more intermediate term than short term. Our strength in municipal bonds might be different than others. We just have really, really strong performance across lots of categories in fixed income, but municipals in particular, and we're starting to see people use those more and more. And then internationally, across the globe, especially in the institutional space, the investment grade in the corporate area is picking back up. And then our bank loan franchise and CLO franchise owing to the fact it is global and it's represented in all the different formats; for instance, the ETF is generating a lot of flows and a lot of interest. So we think we're well positioned for hopefully this movement increasingly into fixed income further out the curve, and we think we're trying to strengthen.

And there's been some volatility in rates and in the outlook. Have you seen anything in that adjusting environment or changing environment shift any?

Look, the only thing I'd say that's slightly surprising is how durable cash assets are right now. I mean, so you look at it from a rate standpoint and you start to say there's movement in opportunity. I think there's a -- it's more of a commentary of people's conviction in the marketplace. So that's probably the only big surprise to me that there were $450 billion of cash -- more cash assets generated in the fourth quarter in the industry, which I wouldn't have said if we were sitting here a couple of quarters ago.

Right. Got you. Sometimes that lags the cuts, right?

It typically does. But I think this environment is even more special with all the political change that's been going on and people trying to sort out what does that mean.

Very fair. Very fair. There's also been some, maybe elevated movement in the last 6 or so months, given some disruption at a competitor firm. Have you noticed anything working through the market from that?

I mean there's more searches. We've had some wins as a result of changes at other firms, but we haven't seen a ton of it.

Got it. Got it. You touched on SMAs when you were -- in some of your prior comments. So I'd love to touch on that and double click. It's a wrapper that you historically haven't been really big. But you had a lot of excess, right? Like growing at a 30% clip, which is pretty remarkable. So how are you thinking about scaling that business? And how have you built the momentum so quickly?

So SMAs for us now are $30 billion. So it's grown at a -- from what was $10 billion a handful of years ago. So it's grown quickly, but it's still relatively small. Well, one thing I'd say the market environment is good for SMAs, and we think it's durable. Wealth managers, wealth individuals, technology is better, it scales better, and I'll get into our strategy in a second. So you can kind of move further down market with SMAs. Part of our success and part of our strategy going forward is trying to pick spots where others have been less focused, and for us, that was fixed income. So the fixed income SMA really hasn't broadened out as much as the equity SMAs. So a big part of that growth is fixed income, and that will continue to be part of the story. The other is how to stay very high touch and have very good client service in the SMA world, which has some complexities to it and do it through technology. And we've invested behind that, and that's what we've done. The other is to work through and off of your relationships that have -- that we've built over the years with wealth managers and wealth platforms. So we now have about 50 SMA products across 80 of these wealth platforms and RIAs. So we have been able to use our relationships to get onboarded relatively quickly and then be innovative with the product lines. So don't try to do everything for everybody. I think the SMA is one of those things where the answer to every question could be yes, because you can individualize them. And we've tried to stay disciplined in the spots where not just fixed income, but the spots and equities and quant equities that we really can be different. So I think the growth potential for us in SMAs is quite high, bringing the capabilities we already have today. So it's a packaging strategy.

A wrapper approach rather than something that's wholly new. So I really -- we're sort of bearing the lead here, but expenses were a very big topic during the last call. So I'd love to jump to that. You guided to 1% expense growth in the year, which was better than expected for sure. How do you balance discipline and investment spend? And is there some minimum investment threshold. I know you got a lot going on with Alpha?

Yes. It's an important question. And what we announced in the quarter, we feel really good about. And it keeps in mind all of the different elements that you were just mentioning. Let me maybe start at the beginning. The discipline that our management team has put on expense management has been really strong in the last 2 years. And so I think we've built that muscle. I think we've got discipline. And it's not just about cost reduction, and we did reduce cost on a run rate basis by $60 million from when we announced that a year or 18 months ago, but it's also been about reallocating. And I think that's the muscle that we've that we've strengthened. And so when you hear us talk about expense growth of 1%, it's against the backdrop of it's net. So it's a backdrop of investing. And so we've been investing in the product line. We've been investing in distribution. We've been investing in operations and technology. So now we can use that scale, and we'll continue to do these trade-offs and rotate money around. So I feel really good. We feel really good about the amount of investment we've put back into the business while maintaining this kind of flattish sort of expense growth. Again, against a normal flat market environment, and we have about 1/3 of the expenses that are variable now. So we feel great about it and I'm glad we've been able to build that discipline.

Right. This came up a little bit when we had dinner back late last year. But are you able to get to a place where you can reengineer the expense base so that you can get operating leverage without the market tailwind?

Yes, we think we can. And we've kind of had a stated public goal of wanting to be in that mid-30% operating margin in the medium term against normal market conditions, obviously, ones that are excessively high or ones that are excessively low, we'll have to flex. But I think we demonstrated it through the course of the year. So operating margins were in the high 20s at the beginning of the year. We left in the fourth quarter with a close to 34% operating margin. And I think you have to -- the way we've built it as a balanced portfolio, and we don't manage the expenses and think about the profitability the same across the whole company. So on the one hand, growing out in ETFs or growing fixed income or growing SMAs, these are businesses we can scale really, really well. And so the profitability that we can generate from these is quite high. And then you think about businesses on the other end of the spectrum, like private markets, which are really high touch. As we grow those, we can grow the profitability differently, and it's less operational dependent and more people dependent. And then if we can get some of the narrowness that's been in the markets to become a little more extended and you start to see interest come back into global, international, emerging markets, China, which are strengths of the firm, and those are cycles, and we're at one end of the cycle right now. In addition to everything I said, you can start to get an environment where our margins and our operating leverage looks pretty different against the expense base that we already said we're thinking about differently.

Right. And we can't talk about expenses at Invesco without Alpha. So you guys laid out some decent way to think about the near term at least. And of course, also the challenge of visibility behind that. But is it your expectation that at some point, Alpha is going to actually deliver net benefit rather than the investment and the increased costs?

Yes. I mean that's the expectation. And so for those that are less tuned to the story, the Alpha is being implemented in phases. And so the first phase went live close to the end of the fourth quarter of last year. It was really important to get that first phase implemented. And the second, third, fourth, the extended phases will happen through the course of this year and into '26. All along the way, we're going to be learning from each phase as we implement the next one to get better and better at executing. And in the end, to answer your question, our expectation and goal is that we're going to have less systems. We're not going to have just one system, but we're going to have less systems across spaghetti of systems that had been in there historically or here historically. We'll have simpler processes across our investment teams, more standardized processes, and we'll have more agility and an ability to execute our strategy even more effectively of bringing these different investment capabilities across markets, different formats with same investment themes. And so all of those things are going to happen through the course of not just while we are implementing it, but certainly at the end. That's the expectation.

Okay. Got it. Private market -- you touched on private markets a little bit before. It's been a big area of focus, not only for Invesco, but the whole industry. It's been -- it seems like from my perspective, it's been a bit of a journey. INREIT, you guys launched, but maybe the timing was bad or whatnot, but I'd love to hear what you think might have been off there. And then in craft, you touched on real estate debt before. That's clearly gone quite well. So what was the -- what were the differences in those products? And how you've been so successful?

Yes. Timing is important with anything. I'll get to some of the learnings and maybe where we're going in a moment. It's a $130 billion private markets platform with its 2 core -- our 2 core strengths being in real estate-real assets and in alternative credit-private credit, with a distinct focus on structured loans. And so the strategy had been, like many others, we've been -- our history -- our pedigree has really been in the institutional markets, and so how to bring that to not just U.S. wealth, but global wealth. And our first foray into that was INREIT, which is the real estate equity strategy. So the timing was off a little bit. But what we built around INREIT was taking our very deep wealth management distribution force and augmenting it with some specialized distribution to sit inside it and work in a team of teams kind of approach. We invested in operational platforms and specialized resources on the product line and how to put together the right product structure. And we invested behind education service to make the clunkiness of the private markets experience for individual investors in a wealth management platform better. And so through INREIT, we did all of those things and learned all of those things. The onboarding of INREIT took 2, 3 years in some cases to actually get it on to some top platforms, whereas the now experience when we bought this real estate debt strategy, right time, less competitors and using that whole same network and platform we had, including just relationship capital that we built. And the onboarding of that by wealth platforms has been a fraction of the time. And so in the short while that, that strategy has been in market, it's now on 2 of the major -- they're not wirehouses anymore. And every time I say that it's like I'm offending somebody, but 2 of the 4 biggest wirehouse platforms in the marketplace, the real estate debt strategy sits on as well as dozens and dozens of other platforms in the RIA space, the independent space, et cetera. So we've got the flywheel moving. That strategy is up to over $2 billion in assets in it and several hundred million dollars a quarter, which is not the goal, but you can see the flywheel starting to move. So we learned a lot. Some of it, you get a little luckier than others. And now we have an alternative dynamic credit strategy that does asset -- basically asset allocation across all different parts of the credit sphere, and it's going to leverage off that same platform. So a very long-winded way to say, once you get this going and you're thoughtful about the strategies you bring, and we don't need dozens, you really can start to make -- really start to make inroads.

Right. And how big do you expect that, that offering can get for Invesco?

Yes. Maybe I'll take it at a bigger level than even just any single strategy. So $130 billion is about 10% of our long-term AUM. And you think about what allocations look like for institutions today, or what the aspirations of UBS and others in the space are for high net worth individuals or even mass affluent individuals, you're closer to 20% than 10%. And so as we think about being a complete solutions provider to clients, we want to have a private markets offering that's not just 10% of our assets, but closer to 20%. And so that's going to happen through organic growth and through partnerships and other things we'll do, and wealth is going to be a big part of that. So I think these strategies can be exponentially larger. And we're trying to bring strategies that can serve lots of interest and not just be overly specialized because they all take a lot of work.

Right. And you touched on the distribution that will get you there, which is helpful. You touched on partnerships. We've seen a pretty active news front there. Is that something that's interesting for you? And what would be of interest in particular?

Yes. I mean partnerships -- I mean, first of all, the last 18 months, 2 years with our leadership team and what we've been focused on, I don't want to call it heads down on organic growth and what we're doing inside the company, but it's been the focus to make the company operate better, to have it more focused, to produce better financial results. As we look forward, partnerships or other ways to grow outside of just our own 4 walls is going to be critical. But Invesco's experience in partnerships is pretty deep and pretty wide. And I think it's important to talk about that for a minute because I think we're known as doing acquisitions, but we're also known for doing partnerships. So our joint venture in China that we put together 21 years ago, the joint venture we just set up in India to grow our asset manager there. What we do with MassMutual, how we grow our ETF business, they are all off the back of partnership. And so I think we have some DNA in the company, and I think it's something we believe in. So to answer your question very specifically in the private markets -- and that can apply outside the private market space, but in the private market space, we're going to continue to look for people that can be additive to the product offering that I just described or the investment capabilities where we have strength. So outside of that sort of real asset and parts of all credit that we're strong in. It's going to be people that can bring some kind connected distribution. And for us, we have wealth management distribution, but how could we find partners that could amplify that or help us in other channels where maybe we're less strong like insurance. And then lastly, we're going to look for people that can help bring us capital and being able to bring these capabilities to market in wealth does require not just capital to get them started, but you really want to show up with an advanced portfolio and things that -- where there's [indiscernible] behind it. And so all 3 of those things will be things we're on the lookout for.

Got it. You touched on great wealth. So I'd love to drill into that. So clearly, a great sort of growth over time for you guys. It's a bit of a tougher environment, or it has been. What's the -- what's the feeling like on the ground, in the mainland and how have the headlines from the new administration had any kind of impact?

Yes. So in China, our business is domestic to domestic. It's China for China, however you want to say it. It's a retail business largely. So think individual investors investing into Chinese funds. That's our business. And so I'll answer your question from that lens because that's what we can see. I think the economic challenges, the market challenges that are there are obviously real, and you hear it from our clients and you hear it from our investment teams. I think the seriousness that the government on the ground that we've seen firsthand and kind of what you see secondhand about fixing the economy and the care that they have about their capital markets is really high. And the stimulus and the market reforms that have been put in place, I think, are seen as good steps, may not be enough. And I think people are really looking for the next big stimulus, the next big reform. But the direction of travel and what's been put in place has put a little bit of a floor, I think, on sentiment there domestically. And just a testament to that, our business in the fourth quarter saw $3 billion of positive flows, which is pretty decent, and we launched new strategies and now those flows are coming in, ETFs in the equity markets. They're coming in fixed income and what they call fixed income plus, which is balanced portfolio. So you're seeing people kind of, I'll call it, tiptoe into the market. Invesco, given our long history there, despite the near-term challenges, we believe that the government needs to establish a very strong capital market there for an economy of its size, and it has to maybe even more impactfully have a retirement market that's really going to be able to keep pace with its expectations for its economy and for its citizens. And so those are the reasons we're there, is because we believe that the retirement markets and the capital markets. It's about $95 billion of assets that we manage for these retail investors that we've built over 21 years. It makes us a top 15 asset manager in the retail space and the second largest foreign affiliated. It's a diverse business across equities, fixed income, money markets, balanced. It's accretive to our margins, around 50% or so. It requires no additional capital and our brand is well established there. So as this floor has now hopefully been established, and we start to see sort of China's investors start to reemerge over time, whatever that is, a year, 2 years, 6 months, I don't know, we are gathering share. And I think we're a very established brand and presence there, and we'll see how we go.

Yes. Well, it certainly sounds like 4Q was a good sign.

It was a bit of a turning point and we issued new products. And so we can see it.

Yes. It seems that way. Another area of strength for you guys is ETFs. You're part of the oligopoly. So I'd love to hear -- funny. I always think about -- I don't think it's branded power shares anymore?

Not anymore. Not for a while, where have you been?

I know, I know. I'm an old guy -- old dog and I'm slow to...

But you're right. That was the original brand.

It's the original brand, and I was kind of thought of it as smart beta, but I think that's a dated view too. So what is the right way to think about it?

Yes. So we've been -- we Invesco and Power Shares before us by a couple of years, have been in this ETF space for 2 decades. So it's evolved as we've evolved and -- or as the industry has evolved. Our focus in our ETF business or the heart of it was really retail oriented and these alternative weighted strategies or smart beta, but also unique access, early move or something innovative. And that's really stayed at the ethos of the entire business as we're now an $800 billion ETF player or indexed ETF player around the world, and that's still the way we look at it. So while we have some bulk beta strategies, they're definitely, definitely small minority of product and where others are competing solely on price. That's not really the primary way that our clients, our customers engage with us. They engage with us for performance, for liquidity in some instances, tax optimization or just access to something they're trying to put together in their portfolio. And I think that's made the business more enduring. It's allowed us to grow our net flow market share at 2x that of our AUM market share the last several years and really accelerate that where we're doing 20% organic flow growth last year. I mean it even surprised me, and I've been around the business the whole time. So I think we're really starting to stand out. And as the ETF market has moved globally. Our position in Europe now, we're $130 billion out of EMEA, $50 billion out of Asia. We're taking those same principles into those markets. Fixed income, where we've been largely an equity ETF house. We're now deeply in fixed income. Active management coming into the ETF wrapper, but active management being a part of the investment process even for passive management. These are all like in our DNA. And we've been able to do all of that while improving the profitability tremendously. So when I look forward and think about our ETF business, we do not want to be the biggest ETF player, like size isn't the goal at all. In this case, we want to be the most innovative, continue to have that applied. We want to be the most client-oriented, really close to the clients as they're thinking about the next evolutions and we want to be profitable, really profitable and grow our profits, not grow our assets.

Yes, got it. You guys certainly have a reputation within Our Wealth channel for that.

Yes, I appreciate that, even though you still call it PowerShares.

I thought -- I'm not the wealth side. So their way. I'm more on top of their game. You mentioned price, you don't want to compete on price. So that's clear. The price in ETFs got a lot of attention here recently with a big move by a price aggressive competitor. What do you think the implications are from that? Is there anywhere where you guys line up against them? Where we saw the moves? And how do you expect it to play?

I mean, we -- look, we're constantly looking at pricing, and we studied it closely, even those moves. Back to what I was saying, really how our product lines organized. We don't really compete in some of those big bulk beta spaces where price really is the principal factor. So it's marginal in terms of where that's going to happen. I think maybe when I take a step back from it, look, the ETF vehicle, it wasn't clear that the ETF vehicle is going to be the dominant vehicle that people are going to put both active and passive in, in both wealth markets and institutional markets, too. I think that's really clear. And I think it just shows how competitive the space is. If you're not in it and big like us, it's really hard to -- it's hard to -- it's easy to enter, it's really hard to do it well. And so look, we're just going to stay on what we do. We don't compete solely in those categories and on price. So we pay attention to what those big competitors do. But it doesn't really change our strategy. Maybe it just sharpens our focus on making sure we stick to what we do.

Okay. Got it. We're -- we've got about 10 minutes left. So this is my favorite topic for Invesco. So I've got to hit this. Capital, buybacks. We had a discussion on it. I forget which call it was, but it was one of the, I remember, recent conversations. Now I know this is a complex issue, and I know it has to do with another entity and their decision and taxes and everything like that, but I'm going to stir the pot anyway. So are you guys in dialogue with MassMutual about the pref? And is there a possibility if you guys are in a capital return situation where some of the capital return could be allocated towards paying down part of the pref and chipping away at it? Because also, if you just think about it, a maturity of that size eventually is challenging, right? So chipping away at it seems to make some sense, and I think it helped the stock a lot.

Sure. No, I appreciate that perspective. And we're always listening to yours and other investors' perspective. I'll remind you, even though you don't need reminding, it's not our decision on the MassMutual side. MassMutual, it's a noncallable piece of paper, and it's certainly their decision to make. We're always in dialogue with MassMutual. Whether it's about this topic or it's about other topics and how we grow and the 2 companies are very well aligned. And so if there's ever a opportunity to do something with the pref and it makes sense for everybody, of course, it's something that could be on the table, but it's not our decision just to start. A priority for us as a team, and it really predates me and my seat, was really making the balance sheet a priority as you know. And I think the team has done a great job on putting in a position where we can have these sorts of conversations. And we have flexibility of what to do with our capital. And we also talked about getting our payout ratio above 60%, and we continue to make progress on that. So buying back stock was important. When we hit the milestones, we wanted to hit around managing down the debt position and putting ourselves in a 0 net debt ex the preferred. So it's a long-winded way of saying, I'm happy we're in the position we are now to start to think about our capital in a more flexible way. And we'll continue to dialogue with MassMutual as part of that.

Yes. It's a good kind of problem to solve.

Sure. Complicated, yes.

For sure. And Allison has done a great job [indiscernible].

Absolutely.

Okay. We open it up to the audience. I got a few more, so don't worry. But if there's anything in the audience, we can take that. And I'll get to hit a few more. So...

I'll watch for hand.

You touched on it before, record amount of cash, money funds, right, nearly $7 trillion. But now we've got a positively sloped yield curve or at least we did last time I checked, it's not much of a slope, but positive. So should we expect some outflows out of those money funds? And where do you expect that redistribution to favor?

Yes. I mean it's always a good and important question. Just to remind you, I mean, of our global liquidity business, it's almost all institutional in our case. So keep asking others too about their experiences. So I don't think it's going to be as -- it's not the same as a retail money market fund business. And as I mentioned, somewhat surprisingly, we saw all of this money, $450 billion into money funds and other cash instruments as an industry in the fourth quarter. And we saw, I think, $16 billion or $17 billion of new positive flows in the fourth quarter for our liquidity business. So some of this stuff is not to be repetitive. It's kind of bucking some of the rationale that would normally be there -- common wisdom that would normally be there. I think as there gets -- as there's more confidence in the rate picture, as the curve starts to be more clear and starts to stay that way, as some confidence comes into the market around all the political change that's happening or at least getting more used to it, I think the normal patterns are going to occur. And I do think money will come out of money funds. I mean just -- it should. I mean, people should be putting that to work in a higher-yielding way than they'll get in their money funds and their liquidity. And we're seeing that, as I mentioned before, in little ways. I would expect to see that in big ways. And I think if we see less money in our liquidity business, it will be for good reason, and it will be coming out of the other side.

Yes. And you talked about fixed income. Maybe it's fixed income and maybe risk assets and fixed income. That's why...

I think, completely. And I think that's the first place you'll see it. And that's why I wanted to overemphasize where we're positioned in fixed income. So I mean you have to have the investment performance, and then you have to have the things I mentioned before. And I think we have all the apparatus to do that, and I expect it will happen. And it will happen this year, I'd imagine for the industry and otherwise.

Yes. Okay. I'll go one more chance for the audience, and then I'll go to my next. Okay. Net revenue yield. I should be kind of surprised that we took us this long to get here.

You're in charge.

I know, I know. I'm surprised at myself, I guess. So it's a hard thing to predict.

it is.

Pretty much impossible. I will say this, we've noticed since you guys started to do the enhanced disclosure that the deltas with the Street have really tightened, right, which is great. So that's all constructive. But how do we think about the net revenue yield from here? And is there some -- I know there's probably never really a floor. But do we get to a point where those second derivatives are beginning to inflect a bit?

Yes. I mean -- so I know there's a big focus on that revenue yield and there should be. I think it's important for me to say that it is not the way we manage the business towards the net revenue yet. I mean we're managing it to grow profitability. And you can have lower net revenue yields and more profitability, and we can -- we're attempting to show that. So I'll just mention that out of the gate. The net revenue yield, it is hard to predict where to call the bottom, I suppose. Back to what I was saying before, the narrowness of the market has driven where the yield has shown up for us because people are buying more ETFs. They're buying more fixed income and they're not buying global equities. They're not buying China, et cetera, et cetera, that have higher fields. I think one thing just mathematically that everyone here would understand, but I'll say it anyway, owing to the fact that we actually have a business that goes between mutual funds and ETFs, that goes between fixed income and equities and higher fee-yielding and lower fee-yielding strategies. It shows up in our revenue yield as we're gathering assets, whereas others that we're competing with don't have the other places for it to go. So a flat net revenue yield, but no flows probably isn't a good long-term strategy that we wouldn't employ either. As some of the cyclical things change, Brennan, I'd say, like people coming back into some of these higher field and categories for us in the equity spaces, that we expect will happen or at least the decline rate becomes greater. And as people get back more interested in China domestically in their own market, and as fixed income moves out of money market funds and into some of these higher duration, while we continue to manage our ETF business the way we are, you should start to -- you could start to get a different kind of net revenue yield picture. But back to my first statement, we're going place by place -- or bit by bit, place by place looking for profitability in each of those areas.

Right. And you said it's not how you manage the business. So I think a nice thing to end on or a good question and on might be when you're thinking about revenue growth, like just pure the organic revenue growth, how is it that you are thinking about that? And how are you trying to manage the business so that you can maximize that?

I mean, we've talked about a lot of the growth areas already. So on the revenue side, building out the private market space, returning to flow growth in places like China, but maybe the one thing I didn't emphasize enough. Managing down that redemption rate in those equity categories, global international emerging market is a huge priority. And so the goal for us, what we focus on is our measurement is, is our net flow share or, in this case, decline better than the marketplace? And right now, it's not in those spaces. And so our goal is to get those to be better than the marketplace regardless of what's happening. If it's an outflow, we're in less outflow. If it's an inflow, we're in more inflow. And that's going to get delivered by continuing to improve investment performance, which we're seeing in most cases, and really staying focused and disciplined on the client relationship side. And so that's the only thing I didn't mention that I really want to say is probably the biggest needle mover in terms of revenue growth for Invesco.

Relationship end of things too.

Absolutely.

Yes. Great. Well, a great note to end on.

Thank you.

Andrew, really I appreciate it.

Appreciate. Thanks for the interest.

Thank you.